The ROI Government announced this afternoon their 4 year economic recovery plan. This document set out at a high-level, the plan for the State to save €15 billion over the next four years. This reduction in expenditure/increase in tax revenue is necessary to bring us back to a 3% budget deficit by 2014. Implementation will be through the next 4 years budgets, depending on the economic environment each year. This plan has been agreed with the EU.
The budget only becomes law once the Finance Bills are passed by the Oireachtas. It will be up to the government of the day to implement this plan or their version of it over the next four years.
Total savings :
- – €15bn over four years, of which €6bn in 2011
- – Spending cuts – €10bn (€7bn in current expenditure and €3bn in capital expenditure)
- – Tax and revenue-raising measures – €5bn
High Level overview:
- – Corporation tax kept at 12.5 per cent
- – Minimum wage cut by 12 per cent to €7.65 from €8.65
- – Cut 24,750 public sector jobs
Social welfare – €2.8bn
- – Mainly through cuts to unemployment benefit and child income support
Public sector wage bill – €1.2bn
- – Reformed pension scheme for new entrants to the public service and reduce their pay by 10%
- – Healthcare, education, agriculture, other government operations – €3bn
Income tax increases – €1.9bn
- – By 2014, income tax will be paid by people earning at least €15,300 a year instead of €18,300 at present
Pension adjustments – 865m
- – There is no proposal to change the existing State pension rate
- – The plan seeks to increase the age at which people qualify for the pension to 66 in 2014, 67 in 2021 and 68 in 2028.
- – Reduction in pensions for retired public sectors workers.
Other tax changes – €665m
- – Phased standard rating of income tax relief from 2012
VAT increases – €570m
- – From 21% to 22% in 2013
- – From 22% to 23% in 2014
Land and property tax – €530m
- – Introduction of domestic water charges by 2014
- – Introduction of property tax – €100 household charge in 2012, then value based system (site tax) from 2013.
Other measures – about €500m
- – Increase third level universtity fees from €1,500 to €2,000
2 page summary document:
Download the PDF here
Download PDF here